FOMC Statement

U.S. Federal Open Market Committee Statement: Text2007-10-31 14:15 (New York)

Oct. 31 (Bloomberg) -- The following is the full text ofthe statement released today by the Federal Reserve:

The Federal Open Market Committee decided today to lowerits target for the federal funds rate 25 basis points to 4 1/2percent.

Economic growth was solid in the third quarter, and strainsin financial markets have eased somewhat on balance. However,the pace of economic expansion will likely slow in the nearterm, partly reflecting the intensification of the housingcorrection. Today's action, combined with the policy actiontaken in September, should help forestall some of the adverseeffects on the broader economy that might otherwise arise fromthe disruptions in financial markets and promote moderate growthover time.

Readings on core inflation have improved modestly thisyear, but recent increases in energy and commodity prices, amongother factors, may put renewed upward pressure on inflation. Inthis context, the Committee judges that some inflation risksremain, and it will continue to monitor inflation developmentscarefully.

The Committee judges that, after this action, the upsiderisks to inflation roughly balance the downside risks to growth.The Committee will continue to assess the effects of financialand other developments on economic prospects and will act asneeded to foster price stability and sustainable economicgrowth.

Voting for the FOMC monetary policy action were: Ben S.Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; CharlesL. Evans; Donald L. Kohn; Randall S. Kroszner; Frederic S.Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh.Voting against was Thomas M. Hoenig, who preferred no change inthe federal funds rate at this meeting.

In a related action, the Board of Governors unanimouslyapproved a 25 basis point decrease in the discount rate to 5percent. In taking this action, the Board approved the requestssubmitted by the Boards of Directors of the Federal Reservebanks of New York, Richmond, Atlanta, Chicago, St. Louis and SanFrancisco.